The ATO announced in late September that it would stop accepting credit card payments from December 1, a decision that drew sharp criticism from small businesses. The backlash prompted the prime minister and treasurer to intervene, underwriting the costs so credit cards could continue to be accepted by the tax office until mid-2027.
Mr Mulino said the government stepped in "very quickly" once stakeholder feedback came in. "The transition period, as it turned out, from stakeholder feedback, wasn't enough. And so that's where the government stepped in," he said.
He acknowledged that accepting credit card payments indefinitely would have "very serious fiscal ramifications for the budget" and that the government always argued for a transition period rather than a permanent ban.
The ATO initially defended its decision, saying it could not absorb the estimated $200 million cost and that continuing to accept credit cards would reduce revenue available for government services. Taxation Commissioner Rob Heferen said the ATO "would have preferred to continue accepting credit cards" but that credit card companies did not offer a low enough rate.
The move followed a Reserve Bank of Australia decision to scrap card surcharges from October 1, which the bank said was "in the public interest" and was costing consumers about $1.6 billion a year.
Earlier this month, Treasurer Jim Chalmers said he was aware the ATO was "grappling" with the decision before it was finalised in late September, but was not aware of the specific timeline.